Proper transcription by RNA polymerase II is dependent on the modification state of the chromatin template. The Paf1 complex is associated with RNA polymerase II during transcription elongation and is required for several histone modifications that mark active genes. To uncover additional factors that regulate chromatin or transcription, we performed a genetic screen for mutations that cause lethality in the absence of the Paf1 complex component Rtf1. Our results have led to the discovery of a previously unstudied gene, RKR1. Strains lacking RKR1 exhibit phenotypes associated with defects in transcription and chromatin function. These phenotypes include inositol auxotrophy, impaired telomeric silencing, and synthetic lethality with mutations in SPT10, a gene that encodes a putative histone acetyltransferase. In addition, deletion of RKR1 causes severe genetic interactions with mutations that prevent histone H2B lysine 123 ubiquitylation or histone H3 lysine 4 methylation. RKR1 encodes a conserved nuclear protein with a functionally important RING domain at its carboxy terminus. In vitro experiments indicate that Rkr1 possesses ubiquitin-protein ligase activity. Taken together, our results identify a new participant in a protein ubiquitylation pathway within the nucleus that acts to modulate chromatin function and transcription.